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1. Assume you have a preferred stock that pays an annual dividend of $8 beginning in exactly 5 years. What is its price if its

1. Assume you have a preferred stock that pays an annual dividend of $8 beginning in exactly 5 years. What is its price if its yield is 6%?

2. Neal Inc. has issued a convertible bond at its par value of $1000. The bond pays an annual coupon of 3% while the yield on Neals other bonds is 6%. bond has a 20 year maturity. What is the value of this bonds option to convert?

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